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COVID-19 lockdown: How the industry adapted

One of FTA’s supply chain consultants, Eddy de Jong, gives an overview of developments throughout the lockdown period, and how the logistics industry managed to adapt itself.

Between 16 March 2020 and 25 May 2020, FTA conducted a weekly survey to help identify the issues impacting the sector. The results are being used to inform FTA’s briefings to government and officials, and as such, they have been instrumental in securing a variety of support measures for the industry.

The most significant business impact on the logistics industry has been the overall downturn of volumes and businesses closing. However, the pandemic is affecting logistics businesses in a variety of ways, with no two organisations having an identical experience; for example, after an unprecedented spike in demand at the start of the crisis, grocery retail supply chains have stabilised. 

Meanwhile, e-commerce and home delivery have seen a sustained uplift. Notable examples of where volumes have declined include the drinks on-trade, events, non-food retail and construction as the economy closed down, but this phenomenon is set to change with the further easing of restrictions from 4 July 2020.

While respondents to FTA’s survey initially reported a significant downturn in business, as the nation starts to ease out of lockdown, confidence is increasing.

The reduced workload has resulted in furloughing of staff.  Although 75% of respondents have furloughed staff, the overall level is 10-15% of headcount. This appears to corroborate with the proportion of HGV that are SORN due to COVID-19 and the overall reduction in freight volumes. But with the lifting of some coronavirus restrictions by week 10 of the survey (18 May 2020), more than half of respondents brought staff back from furlough or intended to do so in the following weeks.   

COVID-19 prevention measures

The key COVID-19 prevention measures in place can be split between hygiene and avoiding personal contact. Most procedures were implemented by more than 95% of respondents by early April, showing an industry that is quick to adapt.  The operations that continued to operate throughout the lockdown period provide a good template for any businesses looking to restart or expand their operations, especially when adding the specific guidelines recently issued by the UK government.

Driver self-isolation is down to 4-5% from 12-16% at start of survey period. Warehouse staff isolation levels have taken longer to decrease, perhaps due to the close proximity warehouse staff work in, but recently have come in line with transport.

More recent effects mentioned in our survey data include delayed payment of invoices by customers. This and the overall downturn in revenue has driven operators to look for financial support in the form of government backed loans, accessing the furlough scheme and attempts to renegotiate vehicle leases and rent or mortgage terms. However, these are not long-term solutions and only a recovery in economic activity levels can provide sustainable income for the logistics industry. The shape of economic activity will alter as changes in consumer behaviour and ways of working will, for example, rebalance the levels of e-commerce.

More recent supply issues include sourcing new vehicles, parts and machinery.  This is likely to be a reflection of the stoppages in manufacturing and the reduced levels of international freight.  This may effect the rate of business bounce back.

Logistics operators have been quick to put in place COVID-19 prevention measures.  There has been a significant downturn in business volumes, with individual businesses being impacted to different extends. To reduce the dependency on financial support and ensure a sustainable business environment, volumes need to recover.  The temporary stoppage of supplies especially in parts and vehicles will be an additional challenge to ramp up logistics efforts.

As the economy slowly comes back to life businesses will need to be sure operators have the right measures in place. As a consultant at FTA’s Supply Chain Consultancy service, we are here to help you shape an efficient, flexible and agile future supply chain. https://fta.co.uk/services/operational-consultancy   

Views are based on the results of FTA’s weekly logistics survey and contacts within the trade.

TAGS: COVID-19 News
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